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Economy in Brief

NTC Indexes for the Euro area are Very Weak; MFG Signal is Fading
by Robert Brusca October 24, 2007

The NTC indexes are clear on the Euro area. It is weak. Manufacturing is showing progressively less lift. The service sector, hard hit in September, is up in October, but, were it not for the weak September this October reading would be the weakest on record (meaning since January ‘06 of course). But the manufacturing PMI has much longer history. It is on its lows over the past 22 months but is in its 48Th percentile since its inception going back to 1997, a period that includes a recession. Seeing the manufacturing reading on a two year low and below its range midpoint over the long haul is unsettling. On top of that the manufacturing PMI level is at 51.47 barely above the neutral reading of 50. The current manufacturing level stands that reading at about 97% of its full sample average and median. The charts make it clear that slippage is in train. The rebound in October for services is not something to take to the bank with manufacturing losing momentum especially since the services index is still bearing a low reading. Expect the ECB to remain afraid and on hold after these reports.

FLASH Readings
  NTC PMIs for the Euro area 13 Averages 22-Month Range
3Mo 6Mo 12Mo High Low %Range
MFG 51.47 53.21 54.16 54.84 52.95 54.03 54.91 57.61 51.47 0.0%
Services 55.56 54.04 57.91 58.09 55.84 56.80 57.04 61.21 54.04 21.2%
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